Exhibit 10.1
400,000 SHARES OF COMMON STOCK
First Keystone Financial, Inc.
PLACEMENT AGENCY AGREEMENT
__________________________
December 4, 2006
Sandler O'Neill & Partners, L.P.
919 Third Avenue
6th Floor
New York, NY 10022
Ladies and Gentlemen:
First Keystone Financial, Inc., a Pennsylvania corporation
(the "Company"), and First Keystone Bank, a federally chartered
stock savings bank and wholly-owned subsidiary of the Company
(the "Bank Subsidiary"), confirm their agreement (the
"Agreement") with Sandler O'Neill & Partners, L.P. (the
"Placement Agent") with respect to the issue and sale by the
Company of 400,000 shares (the "Shares") of its common stock,
par value $0.01 per share (the "Common Stock"). The Shares are
to be offered and sold without being registered under the
Securities Act of 1933, as amended (the "1933 Act"), in
reliance
upon exemptions therefrom (including any exemptions under the
rules and regulations of the Securities and Exchange Commission
(the "Commission") under the 1933 Act (the "1933 Act
Regulations")).
The
Company and the Bank Subsidiary have prepared and
delivered to the Placement Agent copies of a preliminary
confidential private placement memorandum dated July 14, 2006
(the "Preliminary Offering Memorandum") and have prepared and
will deliver to the Placement Agent, as soon as practicable,
but
not later than the date of distribution, copies of a final
confidential private placement memorandum (the "Final Offering
Memorandum"), each for use by the Placement Agent in connection
with its solicitation of purchasers of the Shares. "Offering
Documents" means, with respect to any date or time referred to
in this Agreement, the Preliminary Offering Memorandum or the
Final Offering Memorandum, or any amendment or supplement to
such document, including exhibits thereto and any documents
incorporated therein by reference, which has been prepared and
delivered by the Company to the Placement Agent in connection
with its solicitation of purchasers of the Shares.
SECTION 1. Representations
and Warranties.
______________________________
(a) The Company and
the Bank Subsidiary jointly and severally
represent and warrant to the Placement Agent as of the date
hereof and as of the Closing Time (as defined below), and agree
with the Placement Agent, as follows:
(1) Similar Offerings.
Except as described in
the Offering
Documents, the Company has not, directly or indirectly,
solicited
any offer to buy or offered to
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sell, and will not, directly or indirectly, solicit any offer to
buy or
offer to sell, in the United States or to any United States citizen
or
resident, any security which is or would be integrated with the
sale of the
Shares in a manner that would require the Shares to be
registered
under the 1933 Act.
(2) Offering
Documents.
(a) As of 5:00 p.m.
(Eastern Standard Time) on
December 4, 2006 (the "Applicable Time"), the Preliminary
Offering
Memorandum, when considered together with the pricing terms
applicable to
the Shares as specified in Schedule A hereto and any reports filed
by
the Company with the Commission pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act") since the date of the Preliminary Offering
Memorandum (the "Disclosure Package"), did not include any
untrue
statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) The Offering
Documents do not, and at the Closing
Time will not, include an untrue statement of a material fact or
omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were
made, not misleading.
(3) SEC Documents.
(a) Since September
30, 2003, the Company has filed
all documents required to be filed by it prior to the date
hereof
with the Commission pursuant to the reporting requirements of
the
1934 Act (the "SEC Documents").
(b) At the time of the
filing thereof, the SEC
Documents complied in all material respects with the requirements
of the
1933 Act, or the 1934 Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which
they were made, not misleading, and any further documents so
filed prior to the Closing Time, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of
the
1933 Act or the 1934 Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain
an
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(4) Books and Records;
Internal Accounting Controls.
The books, records and accounts of the Company and the Bank
Subsidiary
accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the
results of operations of, the Company and the Bank Subsidiary.
The Company and the Bank Subsidiary maintain a system of
internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial
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statements in accordance with generally accepted
accounting principles in the United States ("GAAP") and to
maintain asset accountability, (iii) access to assets is
permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(5) Financial
Reporting; Internal Controls. The
chief executive officer and the chief financial officer of the
Company
have made all certifications required by the Sarbanes-Oxley Act of
2002
(the "Sarbanes-Oxley Act") and the related rules and
regulations
promulgated by the Commission, and the statements contained in
any such certification are complete and correct; the Company
maintains a system of internal control over financial reporting
(as defined in Rule 13a-15(f) of the 1934 Act) that complies
with
the requirements of the 1934 Act and has been designed by the
Company's principal executive officer and principal financial
officer, or under their supervision, to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes
in
accordance with GAAP; the Company's internal control over
financial reporting is effective, and the Company is not aware
of
any material weaknesses in its internal control over financial
reporting; the Company maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the 1934 Act) that
comply in all material respects with the requirements of the
1934
Act, such disclosure controls and procedures have been designed
to ensure that material information relating to the Company and
its subsidiaries is made known to the Company's principal
executive officer and principal financial officer by others
within those entities, and such disclosure controls and
procedures are effective; the Company is otherwise in
compliance
in all material respects with all applicable provisions of the
Sarbanes-Oxley Act and the related rules and regulations
promulgated by the Commission.
(6) Independent
Accountants. The
accounting firm
which audited the consolidated financial statements included in
the
Disclosure Package and the Offering Documents is the
independent
registered public accounting firm of the Company and the Bank
Subsidiary
within the meaning of the 1933 Act and the 1933 Act
Regulations.
(7) Financial
Statements. The
consolidated historical
financial statements of the Company, together with the related
schedules
and notes, included in the Disclosure Package and the Offering
Documents present fairly the respective consolidated statement
of
financial condition of the Company and its consolidated
subsidiaries at the respective dates indicated, and the
consolidated statements of income and cash flows of the Company
and its consolidated subsidiaries for the respective periods
specified; the financial statements have been prepared in
conformity with GAAP applied on a consistent basis throughout
the
periods involved, except as disclosed in the notes to such
financial statements.
The supporting schedules, if any, included
in the Disclosure Package and the Offering Documents present
fairly, in all material respects, the information required to
be
stated therein, and have been or will be properly prepared on
the
basis described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein, and the summary financial
data
included in the Disclosure Package and the Offering Documents
present fairly, in all material respects, the information shown
therein and have been prepared on a basis
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consistent with that of the audited financial statements included
in
the Disclosure Package and the Offering Documents.
(8) No Material
Adverse Change. Since
the respective
dates as of which information is given in the Disclosure Package
and the
Offering Documents, except as described therein, there has not
been (A) any transaction entered into by the Company or any of
the Company's subsidiaries, other than in the ordinary course
of
business, that is material to the Company and its subsidiaries
considered as one enterprise, (B) any dividend or distribution
of
any kind declared, paid or made by the Company on any class of
its capital stock, or (C) any change or development that
individually or in the aggregate could reasonably be expected
to
have a Material Adverse Effect. As used herein, "Material
Adverse Effect" means any material adverse change or any
development (including any change in statutes or regulations
affecting the Company, the Bank Subsidiary or any of their
respective subsidiaries) which could reasonably be expected to
have a material adverse change in the financial condition or in
the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business.
(9) Regulatory
Enforcement Matters.
Except in each
case as described in the Disclosure Package and the Offering
Documents,
neither the Company nor any of its subsidiaries is subject or
is
party to, or has received any notice or advice that any of them
may become subject or party to, any investigation with respect
to
any cease-and-desist order, agreement, consent agreement,
memorandum of understanding or other regulatory enforcement
action, proceeding or order with or by, or is a party to any
commitment letter or similar undertaking to, or is subject to
any
directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of,
any
Regulatory Agency (as defined below) that currently restricts
in
any material respect the conduct of their business or that in
any
material manner relates to their capital adequacy, their credit
policies, their management or their business (each, a
"Regulatory
Agreement"), nor has the Company or any of its subsidiaries
been
advised by any Regulatory Agency that it is considering issuing
or requesting any such Regulatory Agreement, and there is no
unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any
examinations of the Company or any of its subsidiaries which,
in
the reasonable judgment of the Company, is expected to result
in
a Material Adverse Effect. As used herein, the term
"Regulatory
Agency" means any federal or state agency charged with the
supervision or regulation of depositary institutions, or
holding
companies of depositary institutions, or engaged in the
insurance
of depository institution deposits, or any court,
administrative
agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with
respect to the Company or any of its subsidiaries.
(10) Good Standing of the Company. The Company has
been duly organized and is validly existing as a corporation in
good
standing under the laws of the Commonwealth of Pennsylvania and
has full power and authority under such laws to own, lease and
operate its properties and to conduct its business as now being
conducted as described in the Disclosure Package and the
Offering
Documents and to enter into and perform its obligations under
this Agreement; and the Company is duly registered as a savings
and loan holding company under the Home Owners' Loan Act, as
amended ("HOLA").
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(11) Good Standing of the Bank Subsidiary. The Bank
Subsidiary has been duly organized and is validly existing under
the
laws of the United States of America and has full power and
authority
under such laws to own, lease and operate its properties and to
conduct its business as now being conducted as described in the
Disclosure Package and the Offering Documents; and the Bank
Subsidiary's deposit accounts are insured up to the applicable
limit by the Deposit Insurance Fund of the Federal Deposit
Insurance Corporation ("FDIC") to the fullest extent permitted
by
law and the rules and regulations of the FDIC; and no
proceeding
for the revocation or termination of such insurance is pending
or, to the knowledge of the Company and the Bank Subsidiary,
threatened.
(12) Other Subsidiaries. There are no subsidiaries of
the Company other than the Bank Subsidiary, First Keystone
Capital
Trust I, a Delaware statutory trust and First Keystone Capital
Trust II, a Delaware statutory trust, and there are no
subsidiaries of the Bank Subsidiary other than FKF Management
Corp., a Delaware corporation, First Chester Services, Inc., a
Delaware corporation, First Pointe, Inc., a Pennsylvania
corporation, and State Street Service Corp., a Pennsylvania
corporation, and there are no subsidiaries of State Street
Service Corp. other than First Keystone Insurance Services,
LLC,
a Pennsylvania limited liability company (together, with all
subsidiaries other than the Banking Subsidiaries, the "Other
Subsidiaries"). The
Other Subsidiaries have been duly organized
and are validly existing as corporations or other business
entities in good standing under the laws of their jurisdiction
of
organization and have corporate or other entity power and
authority to own, lease and operate their properties and to
conduct their business as described in the Disclosure Package
and
the Offering Documents.
(13) Foreign Qualifications. The Company and its
subsidiaries are each duly qualified as a foreign corporation or
other
entity to transact business and are each in good standing in
each
jurisdiction in which such qualification is required, whether
by
reason of the ownership or leasing of property or the conduct
of
business, except where the failure to so qualify or be in good
standing would not individually or in the aggregate result in a
Material Adverse Effect.
(14) Capital Stock Duly Authorized and Validly Issued.
All of the issued and outstanding capital stock of the Company has
been
duly authorized and validly issued and is fully paid and
nonassessable; except as described in the Disclosure Package
and
the Offering Documents, all of the issued and outstanding
capital
stock of the Bank Subsidiary and each of the Other Subsidiaries
has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest,
mortgage,
pledge, lien, encumbrance, claim or equitable right; and none
of
the issued and outstanding capital stock of the Company or its
subsidiaries was issued in violation of any preemptive or
similar
rights arising by operation of law, under the articles of
incorporation, charter or bylaws of the Company or any such
subsidiary or under any agreement to which the Company or any
such subsidiary is a party.
(15) Capitalization.
The authorized, issued and
outstanding capital stock of the Company as of March 31, 2006 is
as
set forth in the Disclosure Package and the Offering Documents
under
the caption of "Capitalization"; there have not been any
subsequent
issuances of capital stock of the Company except pursuant to
the
exercise of options to purchase
5
the Common Stock of the Company outstanding as of March 31,
2006;
and, except as described in the Disclosure Package and the
Offering
Documents, there has not been any additional long term (maturity
greater
than one year) borrowings incurred by the Company or any of its
subsidiaries subsequent to March 31, 2006.
(16) Authorization of the Shares. At the Closing Time,
the Shares will have been duly authorized for issuance by the
Company
and, when duly issued and executed and delivered by the Company
to the Purchasers (as defined in Section 2(a)) against payment
therefor in accordance with the subscription agreement
therefor,
will be validly issued and fully paid and nonassessable shares
of
Common Stock; the issuance of the Shares is not subject to
preemptive or other similar rights; and the Shares will conform
in all material respects to the description thereof in the
Disclosure Package and the Offering Documents.
(17) Authorization of Agreement. This Agreement has
been duly authorized, executed and delivered by each of the Company
and
the Bank Subsidiary.
(18) Not an Investment Company. The Company is not, and
immediately following consummation of the transactions
contemplated
hereby and the application of the net proceeds as described in
the
Disclosure Package and the Offering Documents, the Company will not
be,
an "investment company" required to be registered under the
Investment
Company Act of 1940, as amended (the "1940 Act").
(19) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its
respective
articles of incorporation, charter or bylaws or similar
governing
documents, except to the extent such violation, conflict,
breach
or default would not adversely affect the transactions
contemplated hereby or have a Material Adverse Effect. The
Company and each of its subsidiaries have conducted and are
conducting their business so as to comply in all material
respects with all applicable statutes, regulations and
administrative and court decrees. None of the Company or any
subsidiary of the Company is in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or
instrument to which it is a party or by which it or any of them
may be bound or to which any of its properties or assets is
subject (collectively, "Agreements and Instruments"), except
for
such defaults under Agreements and Instruments that would not
individually or in the aggregate result in a Material Adverse
Effect. The execution,
delivery and performance of this
Agreement by the Company, the issuance, sale and delivery of
the
Shares, the consummation of the transactions contemplated by
this
Agreement, and compliance by the Company and the Bank
Subsidiary
with the terms of this Agreement have been duly authorized by
all
necessary corporate action on the part of the Company and the
Bank Subsidiary and do not and will not, whether with or
without
the giving of notice or passage of time or both, violate,
conflict with or constitute a breach of, or default or
Repayment
Event (as defined below) under, or result in the creation or
imposition of any, security interest, mortgage, pledge, lien,
charge, encumbrance, claim or equitable right upon any
properties
or assets of the Company or any of its subsidiaries pursuant
to,
any of the Agreements and Instruments, except to the extent
such
violation, conflict, breach or default would not individually
or
in the aggregate adversely affect the transactions contemplated
hereby or have a Material Adverse Effect, nor will such action
result in any violation of the provisions of the articles of
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incorporation, charter, bylaws or similar governing documents
of
the Company or any of its subsidiaries or any violation by the
Company or any of its subsidiaries of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of
any
government, government authority, agency or instrumentality or
court, domestic or foreign, including, without limitation, the
Office of Thrift Supervision (the "OTS") and the FDIC, having
jurisdiction over the Company or any of its subsidiaries or
their
respective properties or assets (collectively, "Governmental
Entities"), except to the extent such violation, conflict,
breach
or default would not individually or in the aggregate adversely
affect the transactions contemplated hereby or have a Material
Adverse Effect. As
used herein, a "Repayment Event" means any
event or condition which gives the holder of any note,
debenture
or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase,
redemption
or repayment of all or a portion of such indebtedness by the
Company or any of its subsidiaries prior to its scheduled
maturity.
(20) Absence of Labor Dispute. No labor dispute with
the employees of the Company or any of its subsidiaries exists or,
to
the knowledge of the executive officers of the Company or the
Bank Subsidiary, is imminent, which, in the reasonable judgment
of the Company or the Bank Subsidiary, is expected to result in
a
Material Adverse Effect.
(21) Absence of Proceedings. Except as disclosed in the
Disclosure Package and the Offering Documents, there is no
action,
suit, proceeding, inquiry or investigation before or brought by
any
Governmental Entity, now pending or, to the knowledge of the
Company,
threatened against or affecting the Company or any of its
subsidiaries
which would individually or in the aggregate result in a
Material
Adverse Effect, or which could individually or in the aggregate
materially
and adversely affect the consummation of the transactions
contemplated
by this Agreement or the performance by the Company or the Bank
Subsidiary of their respective obligations hereunder.
(22) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than
those that have been made or obtained, is necessary or required
for the performance by the Company of its obligations
hereunder,
or the consummation by the Company of the transactions
contemplated hereby, except as may be required under federal or
state securities laws.
(23) Possession of Licenses and Permits. Each of the
Company and the subsidiaries of the Company possesses such
permits,
licenses, approvals, consents and other authorizations
(collectively,
"Governmental Licenses") issued by the appropriate Governmental
Entities necessary to conduct the business now operated by
them,
and the Company and each of the subsidiaries of the Company is
in
compliance with the terms and conditions of all such
Governmental
Licenses, except where the failure to so possess or to so
comply
would not individually or in the aggregate have a Material
Adverse Effect; all of the Governmental Licenses are valid and
in
full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not individually
or
in the aggregate have a Material Adverse Effect; and none of
the
Company or any subsidiaries of the Company has received any
notice of proceedings relating to the
7
revocation or modification of any such Governmental Licenses
which
would individually or in the aggregate result in a Material Adverse
Effect.
(24) Title to Property. Each of the Company and the
subsidiaries of the Company has good and marketable title to all of
their
respective real and personal properties the descriptions of
which
are contained in the Disclosure Package and the Offering
Documents, in each case free and clear of all liens,
encumbrances
and defects, except as stated in the Disclosure Package and the
Offering Documents, or such as would not individually or in the
aggregate result in a Material Adverse Effect; and all of the
leases and subleases under which the Company or any subsidiary
holds properties are in full force and effect, except where the
failure of such leases and subleases to be in full force and
effect would not individually or in the aggregate have a
Material
Adverse Effect, and none of the Company or any subsidiaries of
the Company has any notice of any claim of any sort that has
been
asserted by anyone adverse to the rights of the Company or any
subsidiaries of the Company under any of the leases or
subleases
mentioned above, or affecting or questioning the rights of such
entity to the continued possession of the leased or subleased
premises under any such lease or sublease, except for any such
claim which would not individually or in the aggregate result
in
a Material Adverse Effect.
(25) Intellectual Property. Each of the Company and
the subsidiaries of the Company owns or possesses adequate
patents,
patent rights, licenses, inventions, copyrights, know how
(including trade secrets and other unpatented and/or
unpatentable
proprietary or confidential information, systems or
procedures),
trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") presently
employed by them in connection with the business now operated
by
them or reasonably necessary in order to conduct such business,
except to the extent the failure to so own, possess or be able
to
obtain such Intellectual Property would not individually or in
the aggregate have a Material Adverse Effect; and neither the
Company nor any of the Company's subsidiaries has received any
notice of any infringement of or conflict with asserted rights
of
others with respect to any Intellectual Property or of any
facts
or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or
any of its subsidiaries therein, which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy would individually or in the
aggregate result in a Material Adverse Effect.
(26) Payment of Taxes.
The Company has filed all
foreign, federal, state and local tax returns that are required to
be
filed or has requested extensions thereof (except in any case
in
which the failure so to file would not have a Material Adverse
Effect) and has paid all taxes required to be paid by it and
any
other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for
any such assessment, fine or penalty that is currently being
contested in good faith or would not individually or in the
aggregate result in a Material Adverse Effect.
(27) Insurance. The
Company and each of its subsidiaries
are insured for commercially reasonable amounts by insurance
companies with an A.M. Best rating of A- or better against such
losses and risks and in such amounts as are prudent and
customary
in the businesses in which they are engaged; all policies of
insurance and fidelity or surety bonds insuring the Company or
any of its subsidiaries or their respective businesses, assets,
8
employees, officers and directors are in full force and effect
in
all material respects; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in
all
material respects; there are no claims by the Company or any of
its subsidiaries under any such policy or instrument as to
which
any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any of
its
subsidiaries has been refused any insurance coverage sought or
applied for within the past three years; and neither the
Company
nor any of its subsidiaries has any reason to believe that it
will not be able to renew its existing insurance coverage as
and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business
at
a cost that would not result in a Material Adverse Effect.
(28) Payment of Dividends. No subsidiary of the
Company is currently prohibited, directly or indirectly, from
paying
any dividends to the Company, from making any other distribution
on
such subsidiary's capital stock, from repaying to the Company
any
loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as
described in the Disclosure Package and the Offering Documents
and as such subsidiaries may be limited by regulations issued
by
Regulatory Agencies of general applicability.
(29) Environmental.
The Company and each of its
subsidiaries (A) are in compliance with any and all applicable
foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants (
